Bitcoin Reflections: Key Levels Approaching

Bitcoin had another good week with positive news coming in and price continuing to climb. Whether we are reaching levels too fast is another story. The asset definitely has the momentum it needs to break through some key levels and escape out of the bear trend which is still intact.

This week we will begin our reflections from a technical perspective and spend the latter part of the piece on the major news of the week. Looking forward to your feedback.

Technical Levels

Another week of upwards movement for Bitcoin. During the week we saw multiple retests of the 13EMA line that we have been following closely. The level acted as key support and we continued to see an upward trend. We are now approaching the 200d Moving Average yet again. This is going to be the second retest of the level. The last one was in the final week of April 2018. We didn't manage to break through it last time. This time we also have the psychological barrier of $10,000 which is at the same level.

A clean break of these levels with some consolidation after the break could set up a nice entry for a long position heading into a summer rally.

Bitcoin Future Spreads

Another indicator that we use internally for establishing our long and short positions is spreads between the forwards and the cash market price. The differentials between the prices are also an indicator about the health of the market. In the past we can see that once these spreads started to break out before the cash markets caught up. Spreads are coming in at key levels as well.

Key Fibonacci Levels

Lastly, if we are to take a look at the larger time frame and draw our Fibonacci levels on the entire range since the December highs we get some interesting levels. After we are able to break through the 10k resistance the level we should see a lot of traffic between the $11,300 - $11,800 level. At the same time, unless we see a major fundamental news catalyst pull backs should be buying opportunities. The $7,500 - $8,200 range would be ideal to establish long positions given that you have confirmation from at least 2 other independent reasons.

Coinbase discloses key data

This week the New York attorney General Eric Schneiderman got a response from Coinbase in a general inquiry on all exchanges. Coinbase has doubled it’s engineering staff and overhauled it’s platform as they are preparing for a massive increase in volume this year. To date the platform has transacted over $150bn in assets and has raised $225m in funding. The platform also disclosed that it was recently valued at $8bn in the last investment round.

Coinbase has suffered in the past when it’s platform was not able to keep up with the rapid increase in demand in Q3 of 2017. Also they had several challenges dealing with the updated forks of Bitcoin. This seems to have been resolved and the platform is optimistic about the coming months with regards to Bitcoin trading volume.

Angel investor amasses 10,000 Bitcoins.

Cai Wensheng, an angel investor from China and chairman of photo retouching app provider Meitu recently hosted a Q&A session on popular chinese site QQ. During the session the question was raised regarded his position on the future of Bitcoin. He shared his optimism about the virtual currency and how he set the goal of acquiring 10,000 Bitcoins during the recent downturn.

He claims to have achieved his goal. While there is no way of confirming his position it is another vote of confidence from high profile technology luminaries which have taken very large positions in the crypto currency.

Goldman Sachs to begin Bitcoin futures trading

Investment banking giant Goldman Sachs stated its own money to trade bitcoin futures on behalf of its clients in a few months. This was expected as a couple of weeks ago they announced the hiring of veteran crypto trader Justin Schmidt as head of digital asset markets to help clients gain exposure to cryptocurrencies. Major institutions are hoping to create future products that will give their clients exposure to the asset without all the hassles of owning and storing it themselves.

The board of directors have signed off on the initiative and we could see the announcement of the actual product very soon from them.

Paypal cofounder joining a blockchain intiative

Original Protocol which had raised $3m from Pantera Capital in December has announced that Yu Pan a co-founder of Paypal and early employee of Youtube is joining the company. The protocol that aims to empower developers and businesses to build decentralized marketplaces on the blockchain. The protocol makes it easy to create and manage listings for the fractional usage of assets and services. Buyers and sellers can discover each other, browse listings, make bookings, leave ratings and reviews, and much more.

The company has secured additional funding of over $28.5m in April. Getting votes of confidence from strong technology talent is exactly what the blockchain space sorely needs. It is great to see a continued exodus towards this space during the last 12 months.

Telegram scraps plan for public ICO

After raising more than $1.7bn from less than 200 investors, Telegram is the largest ICO to have taken place to date. Following the trend that most ICO’s are taking they have recently announced that they are scrapping plans for continuing the public ICO that was on their roadmap. This stance is being taken by several high profile companies in the space. The regulatory climate has changed since the wild days of 2017. Companies are far more reserved and cautious when raising money from the public.

In our opinion this is a probably the best route for high profile ICO’s to take. Until we do not see some additional regulation and compliance steps around ICO’s it is best to remain cautious and raise from accredited and high net worth individuals.

Let’s hope for a continued upward run for Bitcoin. I wouldn’t be surprised by short term pull backs and would consider them opportunities unless something fundamentally changes in the public narrative. As always please remember to trade with a plan.

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